This blog has been written with the intention of helping young advocates make informed decisions while preparing and filing a case u/s 138 NI Act, 1881. We have made every attempt to make it as comprehensive as possible. A vast number of new advocates take up S.138 NI cases as their first cases. Therefore, we intend to assist them in every manner possible.
Table of Contents
- Procedure to be followed in matters with regard to Section 138 of the Act
- How to seek interim compensation?
- Depositing of 20% amount by Appellant (Drawer) in High Court
- Checklist of details and documents required while filing
- How to calculate court fees?
Procedure to be followed in matters with regard to Section 138 of the Act
The cheque needs to be presented to the bank within a period of three months from the date on which it was drawn, whichever is earlier.
A legal notice shall be issued to the drawer within 30 days of dishonor of the cheque by Registered Post with all the relevant facts. The drawer is provided a period of not more than 15 days to make the payment. If the payment is made, then the matter is resolved, and the issue is settled. If the payment is not made, then the Complainant can file a criminal case under Section 138 of the NI Act against the drawer within 30 days from the expiry of the 15 days specified in the notice with the concerned Magistrate of competent jurisdiction.
If the court is satisfied with the Complainant, a summon is then issued to the Accused to appear before the Court.
If the accused abstains from appearing before the Court after the Summons is served, the court may issue a Bailable Warrant. If the accused further defaults, a Non-Bailable Warrant may be issued.
Upon the appearance of the accused, he may furnish a Bail Bond to ensure his appearance during the trial.
If the Accused pleads guilty, the court will post the matter for punishment. If the accused denies the charges, he will be served with a copy of the complaint.
The Complainant may present his evidence by way of affidavit and produce all documents, including the original cheque in support of his complaint. The Complainant will be cross-examined by the accused or his counsel.
The Accused will be given an opportunity to produce his evidence, submit documents, and bring witnesses in support of his case.
The final stage of the proceeding is that of the arguments, after which the court will pass judgment. If the accused is acquitted, the matter ends. However, the Complainant may appeal in the High Court. Similarly, if the accused is convicted, he can file an appeal in the Sessions Court.
How to seek interim compensation?
The Complainant may file an application under Section 143A, either along with the original complaint or separately during the pendency of the complaint.
This provision empowers the Court to order the drawer of the cheque to pay interim compensation (maximum 20% of the cheque amount) to the Complainant. The amount must be deposited within sixty days from the date of the order.
A further extension of up to thirty days can be granted if the Accused shows sufficient cause. There is no specified mode of recovery. The said amount may be recovered as per Section 421 of Cr. P. C – by way of attachment and sale of any movable property of the drawer or a warrant to the Collector of the concerned district to recover the same as arrears of land revenue.
If the drawer is acquitted, the Court shall direct the Complainant to repay the amount of interim compensation with interest at the RBI bank rate prevalent at the beginning of the relevant year.
Should you report to the Police or Adjudicating Officer?
You have two options – either report to the police or approach an adjudicating officer.
If you wish to penalize the accused under the Bhartiya Nyay Sanhita, 2023 (BNS), approach the police. If your intent is to recover compensation, approach the adjudicating officer.
These remedies are not mutually exclusive. You can exercise both simultaneously or sequentially.
To take the matter to the police, you can:
- Write a letter (attested by the Complainant) addressed to the DCP Office with jurisdiction. Keep the speed post receipt safely.
- Walk into the DCP Office with two copies of the attested complaint. Get one copy signed and stamped.
Note: Mention a request for lodging an FIR in your complaint.
Alternatively, you can lodge an FIR at the Police Station with the correct jurisdiction. You can find the DCP Office or Police Station details online.
Depositing of 20% amount by Appellant (Drawer) in High Court
Section 148 mandates that in an appeal by the drawer against conviction under Section 138, the Appellate Court may order the appellant to deposit a minimum of 20% of the fine or compensation awarded by the trial Court.
If the appellant is acquitted, the Court shall direct the Complainant to repay the amount with interest.
Along with Form No. 32, the Magistrate also needs to seek certain information to be annexed in a separate sheet, as per the Delhi High Court’s order in CRL. M.C. 1821/2013 and CRL. M.C. 1822/2013.
Checklist of details and documents required while filing
- Original cheque
- Name of the accused company/party
- Particulars of the dishonored cheque(s)
- Name of the person/company in whose favor the cheque(s) was issued
- Drawer of the cheque(s)
- Date of issuance
- Name and location of the drawer’s bank
- Name and location of the drawee’s bank
- Cheque number(s)
- Name of the signatory
- Cheque return memo from the bank
- Name/designation of the person liable in case of a company and their role
- Particulars and service status of the legal notice
- Verification and affidavit of the Complainant
- Reply to legal notice (if any)
- Vakalatnama (with court fee)
How to calculate court fees?
Court fees vary by State. For Delhi District courts (per amended Court Fee Act, 2010):
- ₹1 to ₹10,000 – 2.5% of the amount exceeding ₹1
- ₹10,001 to ₹20,000 – ₹250 + 3.5% of the amount exceeding ₹10,000
- ₹4,00,001 and over – ₹13,350 + 2.25% of the amount exceeding ₹4,00,000
